Posted by DigiNomad on 17th of Apr 2023 at 11:42 am
(Correction) SPX short calls - get em while they're hot! I
normally stay in a 21 - 45 DTE range, but I decided to go out to
July today to "lock in" some easy income by selling SPX 4460 calls.
I use quotes on "lock in" because there is no guarantee we
won't rally to 4460 by July, but I very seriously doubt it.
The probabilities say there is a 20% chance of hitting 4460
by July expiration. If that happens, the roll to defend the
position would be up past the 4600 level...which is likely
untouchable. If doing something like this, remember to keep your
initial position small so that you can roll up to safety (and
profits), if challenged.
The implied volatility of SPX options is the lowest its been in
years. I wouldn't describe any sale right now as "easy
income". Why did you go out farther in time? Likely because the
premium for shorter term options simply wasn't there. Not
saying you won't be right. Just that option premium is "dirt cheap"
compared to the last few YEARS.
Posted by DigiNomad on 17th of Apr 2023 at 12:13 pm
I went further out in time to sell a technical level I felt
comfortable with that is at or around 16 delta (> than 80%
probability of profit). I agree with the low historical
volatility - that's why I'm not touching the short put side of the
equation right now (I usually do, but not at extremes). 16 delta
puts for July are currently around 3750. Selling that level is
madness, in my opinion.
At the end of the day, the proof is in the equity returns
curve. See attached for accounts where I switched over to this
strategy in September of 2022.
(Correction) SPX short calls -
Posted by DigiNomad on 17th of Apr 2023 at 11:42 am
(Correction) SPX short calls - get em while they're hot! I normally stay in a 21 - 45 DTE range, but I decided to go out to July today to "lock in" some easy income by selling SPX 4460 calls. I use quotes on "lock in" because there is no guarantee we won't rally to 4460 by July, but I very seriously doubt it.
The probabilities say there is a 20% chance of hitting 4460 by July expiration. If that happens, the roll to defend the position would be up past the 4600 level...which is likely untouchable. If doing something like this, remember to keep your initial position small so that you can roll up to safety (and profits), if challenged.
The implied volatility of SPX
Posted by pep8261 on 17th of Apr 2023 at 12:03 pm
The implied volatility of SPX options is the lowest its been in years. I wouldn't describe any sale right now as "easy income". Why did you go out farther in time? Likely because the premium for shorter term options simply wasn't there. Not saying you won't be right. Just that option premium is "dirt cheap" compared to the last few YEARS.
I went further out in
Posted by DigiNomad on 17th of Apr 2023 at 12:13 pm
I went further out in time to sell a technical level I felt comfortable with that is at or around 16 delta (> than 80% probability of profit). I agree with the low historical volatility - that's why I'm not touching the short put side of the equation right now (I usually do, but not at extremes). 16 delta puts for July are currently around 3750. Selling that level is madness, in my opinion.
At the end of the day, the proof is in the equity returns curve. See attached for accounts where I switched over to this strategy in September of 2022.
nice!
Posted by pep8261 on 17th of Apr 2023 at 12:14 pm
nice!